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California moves closer to its own net neutrality rule—will it save the open internet?

Antoinette Siu, CALmatters
Published 4:20 p.m. PT June 10, 2018

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Net neutrality as we’ve known it is over. The Federal Communications Commission voted to repeal rules over how Internet service providers, or ISPs, grant online access. And the change could have significant consequences for your Internet.
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With just 10 days to go until the federal government intends to roll back net neutrality, California’s Senate has stepped into the void by advancing a bill that aims to maintain equal internet access for all its citizens.

This fight over who pays for the internet and how it should be regulated now shifts to the Assembly and, if it passes there, on to Gov. Jerry Brown. If he were to sign it, the state would have the strictest net neutrality rules in the nation—but could well face a court challenge from internet service providers who contend the state is overstepping its authority.

Democrats have been pushing legislation to require internet companies to play by net neutrality rules ever since the Federal Communications Commission voted to repeal net neutrality last December. The federal regulations, set to be jettisoned June 11, ensured that internet providers such as Comcast, AT&T and Verizon give equal access to the web, regardless of payment, data or type of service.

The Senate voted this week along party lines to approve Senate Bill 822 by San Francisco Democrat Sen. Scott Wiener. The proposed regulation would prevent internet service providers from blocking or slowing down internet traffic for consumers, and also prohibit them from giving priority deals to those who pay for sponsored content.

In recent years, the FCC has found that Comcast and Verizon interfered with access by giving priority to certain users in exchange for compensation.

But internet providers say this sort of regulation will drive up their costs to comply, meaning they would need to charge customers more for internet services. Plus, they note, the proposed California rules would be even more restrictive than the federal rules they aim to replace.

“We need to act at a state level to protect residents, their businesses, our democracy,” Wiener told CALmatters. “When you have internet service providers picking winners or losers on the internet … it impacts everything.”

Everything from the startup businesses to brick-and-mortar companies, and from grassroots activism to telemedicine rely on accessing the web, he said, and all those users could be impacted when internet providers start manipulating speed, access and prices for consumers.

Earlier this year, state Sen. Kevin De Léon, a Los Angeles Democrat, introduced a similar bill that is currently in the Assembly. De Léon’s bill aims to adopt the key parts of neutrality rules established by the federal government in 2015.

Since the FCC repeal, 28 states, including New Jersey and Vermont, have introduced legislation to protect net neutrality, according to a legislative analysis.

But Wiener says his bill is more comprehensive than some others by writing rules beyond that of the federal order established three years ago. For instance, it prohibits internet providers from engaging in zero rating, the practice of incentivizing users to use their products rather than their competitors’ in exchange for free data, for compensation from third parties.

It would put the state attorney general in charge of enforcing these rules at an annual cost of $1.8 million.

Supporters of net neutrality argue that consumers should be free to choose and access websites as they want, without interference from a handful of internet providers. They also contend that creating different tiers of service would further the digital divide between those can and cannot afford access to the web.

The bill has broad support from labor groups and companies that rely on the internet.

Because 87 percent of rural Americans have one or no option for high-speed internet, removing net neutrality protections would hurt innovation, small businesses and consumers, said the Internet Association, an organization representing members like Amazon and Netflix.

“We use apps to find marches and to meet other activists, to learn about candidates, and to find a movement where we feel represented,” the California Labor Federation said in a statement. “All of this depends upon unfiltered access to the information we seek. That is all this bill will provide.”

The gatekeepers, on the other hand, don’t want more regulation on their businesses. Moreover, internet service providers and other opponents say a California net neutrality bill would add to their costs of operating in the state.

And because it is costlier to provide service in rural areas, the companies say this regulation would discourage broadband investment in those areas.

“Given that providers have finite budgets, and rural areas are generally the most expensive in which to deploy broadband with challenging payback economics, increased regulatory expenditures necessarily drain the capital available for rural broadband deployment,” Frontier Communications wrote in an opposition letter.

Republican lawmakers who opposed the bill insisted that it would increase the costs on internet providers, who would then simply pass those extra costs on to their California customers. Sen. Patricia Bates, a Laguna Niguel Republican, said the debate for net neutrality should take place at the federal level—not here.

“Internet providers are already held legally accountable by the California attorney general and federal government. Ultimately, all this bill will succeed in doing is opening up our state to legal challenges and costly litigation, which we know is coming if the bill is passed,” Bates said.

If the bill makes it out of the Assembly and becomes law, internet service providers will have to obey these regulations if they want to operate in the state. But they’re unlikely to go down without a fight.

Said Sen. Bob Hertzberg, a Van Nuys Democrat who voted for the bill: “We know the second this thing passes, all the various players ... are going to litigate it.”